The kicker is that the lenders on those same transactions have to send out letters as well, Hesterberg told the Automotive News World Congress today.
"Our company alone is sending out over 9,000 of these letters per month. The absurd fact is that the lenders are required to send out the same letter," Hesterberg said. Group 1 was the fourth-largest U.S. dealership group by new-vehicle unit sales in 2010, according to the Automotive News ranking of the top 125 dealership groups.
Starting July 21, 2011, under Federal Trade Commission rules, if the customer's credit score was used in the adverse decision, the adverse action notice must provide a credit score disclosure with specific details, including which credit bureau was used and the high and low range of scores.
"So what happens is a customer who receives a stipulation on a loan application, or is rejected, gets two letters reminding them of their credit quality. Good for the post office, bad for us from an expense and customer satisfaction perspective," Hesterberg said.
Hesterberg said state governments add to the paperwork burden, too.
"Did you know that when a husband and wife buy a car in Texas (with a trade), they are required to sign up to 56 times and 9 initials?" Hesterberg said.
He said requirements are similar in several other states. He said, "It is ridiculous what we are putting our clients through to purchase their vehicles!"